ABSTRACT
Economic transformation requires the diversification and industrialization of an economy. Manufacturing of capital goods is the most transformative subsector of industry. Capital goods are a diverse subsector used to manufacture machinery and equipment used in all types of economic activities. They include engineering and construction machineries, agricultural, transportation, energy generation, and equipment, and so many types of machinery and equipment for various sectors.
Capital goods are also the subsector where most technological changes take place. Once a country establishes a substantial size of the capital goods subsector, it can supply many of its own industries with machinery and equipment, and it can guide much of its own technological advancement.
Capital goods industries are usually large and depend on the exploitation of economies of scale. They have beneficial external effects in the surrounding countries as they have large spread effects in the neighborhood. To maximize the spread effects of capital goods manufacturing in Africa, there is need to build intra-African infrastructure, especially transport networks, ports, energy, and ICT.
